IPO or Initial Public Offering is the debut of the stocks of a company on the public market. A company starts the process of IPO for the reason of raising funds from the public in order for its business operational purposes. This IPO turns out to be beneficial for both the company and the investors.
IPO or Initial Public Offering is the debut of the stocks of a company on the public market. A company starts the process of IPO for the reason of raising funds from the public in order for its business operational purposes. This IPO turns out to be beneficial for both the company and the investors. In fact, this is true that as an investor, you can grow your money by investing in the IPOs in 2020. Investing in IPOs is a money-making option for many of the investors who make these investments for the long term and gain huge gains from the investments.
Financial Experts Vedant Goel, Founder of Ipocorner say, “IPO Investments have the potential for meeting long term goals of investors which can bring them big returns on their minimum investments. If invested wisely, the return on the investment can be huge, which can fulfill long term financial goals.”
Just the term of IPO investment is not enough for an investor to grow the investment amount. You should follow some points while investing your money in the IPO of any company so that you experienced a high gain in the long term period of time. Here are a few tips which you should follow, which can actually help you in growing your money through IPO investment in 2020.
Plan Early
This is true that you can grow your money through IPO investment. Although the returns are not fixed and guaranteed, historical performances of most of the IPO stocks can provide you a rough calculation that it is a profitable deal. Logically, when a company’s revenue is increasing each year, what do you say? Isn’t it beneficial to invest in that company? If you really want to invest in IPOs, you should plan early about your investment.
Always go for Reputed Profit Making Companies
As has been said above, it is always a profitable deal to invest in a company whose revenue is increasing every year. Therefore, for an assurance to grow your money through IPO investment, you should always search for the reputed profit-making companies and plan to invest in their IPOs. Once you are allotted shares for any of these companies, you will just have to leave them for a long term period of time and see your money grow.
Watch out for Investment Bankers Underwriting the Issue
While launching an IPO, a company hires investment bankers as underwriters for making sure if the company has followed the entire regulatory requirement for launching an IPO. Investors who plan to buy a company’s IPO should always watch out for the number of investment banks participating in the issue. Because the fact is that the larger will be the group of investment banks participating in the issue, it is a more likely possibility that the IPO prices will trade at higher levels after the issue.
Don’t go for Short Term as Long Term is the Key
This is true! The real key to success for an IPO investment where you can really grow your money at a high rate is ‘long term investment.’ IPO investments should be made for the long term. These investments can be beneficial in the short term time period also, but if you compare any IPO for short term return on investment and long term return on investment, the data will always show a very high return in case of long term. For example, let’s assume that company ABC has launched an IPO in the year 2012 at Rs. 100 per share. In 2015, the share price traded at Rs. 1000, and in 2019, the same share price trades at Rs.1500. What do you see here? The return on investment in 7 years is greater, and the return on investment in 3 years. More the time you leave your IPO investment, the more financial gain you will have.
Conclusion
IPO investments have been lucrative money, making options for many of the investors. Being an investor, you can easily grow your money through IPO investment by just following certain guidelines, which are mentioned above. A recent IPO of Avenue Supermarts was issued in 2017 at Rs.299, but the IPO was listed at Rs.604. This means a gain of Rs.305 per shares, as listing gains. At present, the share price last traded at Rs. 1250. That’s a gain of Rs. 951 per share in just three years. If anyone had bought a total number of 1000 shares in the IPO issue of Avenue Supermarts, the investment of Rs.29900 would have turned to Rs.1, 25, 000 till now. Therefore, IPO investment can be considered as the perfect way to grow an investment amount in a fixed period of time.
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